HONG KONG, Nov 10 (Reuters) – Kuwait Finance House <KFIN.KW>, the countryâ€™s biggest Islamic lender, is looking for real estate investments in southern China and Europe to expand its assets under management, a senior official said on Wednesday.

Kuwait Finance House has $1.5 billion in assets under management (AUM), with investments primarily in key U.S. cities, Malaysia, Shenzhen in China, and the Middle East, Ali Al-Ghannam, international real estate department manager, told Reuters.

The real estate arm, which started operations in the 1990s, has previously invested in property in the United States and Europe, including Britain, with AUM totalling $4-4.5 billion, but it liquidated those assets in 2005 and 2006.

â€œBack in 2005 and 2006, we could see that prices were very very expensive, and if you are in the industry you get very worried because of where they are heading,â€ Al-Ghannam said in an interview on the sidelines of a conference in Hong Kong.

â€œWe reached a decision in the middle of 2005; we decided to liquidate everything because of the overheated real estate prices.â€

Now, it is back in the business of expanding.

Kuwait Finance House was now focusing on expanding its real estate portfolio globally to reach around $4 billion in coming years, Al-Ghannam said, declining to provide a timeframe. The Kuwaiti lender will be looking for opportunities in Guangzhou, after a successful residential investment in Shenzhen. Both cities are in southern China. Kuwait Finance House, which invests according to Islamic law, also put money into residential property in U.S. cities such as New York, San Francisco and Los Angeles. In Malaysia, which has an active Islamic finance market, Kuwait Finance House is involved in a mixed-use project just across from Singapore that has shopping malls, offices and residential units. The company will also invest in Singapore and Hong Kong if prices are right, Al-Ghannam said.

â€œWe looked at Hong Kong and Singapore, but those two are very expensive.â€

Although seeking to expand globally, it is putting other markets, including Japan, South Korea and India, on the backburner. (Editing by Chris Lewis)